February 10, 2014
A little spec test can go a long way
Procurement Perspectives | Stephen Bauld
Sometimes it can be a good idea to test the marketplace with specific types of specifications to make sure you have the best "go to market" request for proposals (RFP).
When dealing with technical or otherwise complex forms of procurement, it is wise to discuss proposed specifications with a cross-section of prospective suppliers before issuing the invitation to bid or RFP.
For instance, unless the client or purchasing staff really know something about software design, it is wise to consult with a number of software designers before sending out specifications for the provisions of some custom software solution.
Very often, RFP specifications to retain a law firm as general counsel will read like they were drawn up by people who know little more about the practice of law than that which could be gleaned by watching a few episodes of “Law and Order.”
Generally, suppliers are more than willing to discuss the kinds of services and features that a prospective customer should consider when retaining a supplier.
By consulting with three or more suppliers in regard to those services and features (a cross-section is necessary, to avoid the risk of biasing the specifications to the product of a particular supplier), the final specifications will be more comprehensible, sensible and focused on what the market can provide.
It is not difficult to give an example of the kind of problem that such an approach can help to avoid.
In one tender that was received, bidders were asked to quote for the supply of a given product with a particular kind of battery power pack.
One bidder provided this information, but pointed out that using the product in question with the power pack specified would void the manufacturer’s warranty.
This information proved to be correct, and it required the entire tender to be carried out a second time.
When we talk about specifications for services, generally speaking, most of the principles which govern the procurement of goods also apply with respect to services.
However, this is not the case with respect to specifications. Often it can be very different to draw up a proper specification when testing the market for services.
Services tend to be far less fungible than goods. That fact greatly influences many aspects of the manner in which they are procured.
Service needs of a municipality can only be satisfied by a supplier who possesses a particular type of professional expertise. For instance, the legal, accounting and medical needs of a municipality can only be met by a supplier who has sufficient expertise and experience.
Subjective considerations of taste are also relevant in the selection of a supplier for many services (i.e. architectural and landscape design, web page design, corporate images, etc.).
Due to those unique attributes of service procurement, cost is unlikely to be the deciding consideration in the award of a municipal contract.
As a consequence of the non-fungible nature of services, it is far more common to use the request for quotation procedure when procuring them than it is in a tender.
Service procurement well illustrates the need to consider total value as well as price when awarding a municipal contract.
It will often be found that the increased value of a more costly service provider is more than sufficient to offset the cost.
For example, a lawyer who is an expert in the field of environmental law and who charges $450 per hour, may be able to win what appears to be a losing case; in contrast, a lawyer who is fresh out of the bar admission course may lack the experience and subject matter expertise to win a strong case.
Expensive is not always better when it comes to services, but hourly rates are often a good reflection of the quality of service that is on offer.
Stephen Bauld is Canada's leading expert on government procurement. He can be reached at email@example.com.
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